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Will Mobile Phones Replace Cards?
Bastian Knoppers, Senior Vice PresidentCard Personalization and Fulfillment, FIS
Soren Bested, Managing Director Monitise Americas
Kevin Morrison, Senior Vice PresidentPrepaid, US Bank
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Cards vs. Mobile Phones HeadlinesSEPTEMBER 20, 2011Will phones replace wallets?Google Wallet lets you use your phone to pay for purchases at physical point-of-sale machines. Instead of swiping a card or handing over cash, Wallet users are able to open the Wallet app, enter a PIN, and wave their phone next to the reader. At the moment, the service works only with Nexus S 4G phones on Sprint.
Mass adoption of 'wave and pay' years awayFriday 14 October 2011
How Visa Plans To Dominate Mobile Payments, Create The Digital Wallet And MoreAugust 7th, 2011It’s no secret that credit card companies are shelling out big bucks and aggressively forming partnerships and deals to start cashing in on the mobile and digital payments innovations currently taking place.
Mobile payments looking at turbulent timesOctober 12, 2011
No Plastic Needed: Consumers and the Future of Mobile Payments September 30, 2011
NFC Technologyto Redefine Smartphone ServicesNew research report looks at the future development of International Near Field Communication marketsDecember 15, 2010
Nov. 16, 2010, 6:00 a.m. EST U.S. Bank Expands Mobile Capabilities with Innovative New Visa Payment Solution
Cards vs. Mobile PhonesAgenda
Welcome and Speaker Introductions 1 – 2 Minutes
Subject and Format Introduction 2 – 3 Minutes
The Case for Mobile 5 – 6 Minutes
The Case for Cards 5 – 6 Minutes
Rebuttal 3 – 4 Minutes
Rebuttal 3 – 4 Minutes
U.S Bank Perspective 10 Minutes
Town Hall Questions 10 Minutes
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What is a Mobile Payment?
• Peer-2-Peer payments?• Ability to accept credit card payments?• Amazon on a mobile phone?• Bill payment from a phone?• Remote deposit capture (RDC)?
• The ability to use your mobile phone as a payment vehicle at a point-of-sale
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The time has come…1. Convenience of payment
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Transaction Check -7.2% 1 Credit -0.2% 1 Mobile 48.8% 2
(CAGR ’06-’09) Debit 14.8% 1
Prepaid 21.5% 11 The 2010 Federal Reserve Payments Study2 World Payment Report 2011
The time has come…1. Convenience of payment2. Google Wallet and ISIS
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The time has come…1. Convenience of payment2. Google Wallet and ISIS3. Alternative payments networks and products
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Risk of non-interchange based transactions
(e.g. 60% + of PayPal’s transactions are
ACH)
Risk of non-interchange based transactions
(e.g. 60% + of PayPal’s transactions are
ACH)
The time has come…1. Convenience of payment2. Google Wallet and ISIS3. Alternative payments networks and products4. Availability of payment mobile devices
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The time has come…1. Convenience of payment2. Google Wallet and ISIS3. Alternative payments networks and products4. Availability of payment mobile devices5. Availability of proximity Point-of-Sale devices
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85% of POS terminals NFC
enabled by 2016
ABI Research Aug 2011
85% of POS terminals NFC
enabled by 2016
ABI Research Aug 2011
The time has come…1. Convenience of payment2. Google Wallet and ISIS3. Alternative payments networks and products4. Availability of payment mobile devices5. Availability of proximity Point-of-Sale devices6. Convergence of coupons, loyalty and payments
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The Case for Cards
• Any payment system form factor must meet the following criteria
a.Trusted Issuer – The consumer understands the issuer relationship.b.Business Case for the Issuer – Low cost, and secure. c. Interoperability – Ubiquitous in its application. d.Efficient/Convenient for the Consumer – Easy to carry, easy to use.e.Dependable/Reliable – Durable, multiple technologies, long shelf
life.
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The Case for Cards
• Cards meet and exceed all of the following criteria of a form factor
a.Trusted Issuer – The consumer understands the issuer relationship.b.Business Case for the Issuer – Low cost, and secure. c. Interoperability – Ubiquitous in its application. d.Efficient/Convenient for the Consumer – Easy to carry, easy to use.e.Dependable/Reliable – Durable, multiple technologies, long shelf
life.
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Cards vs. Mobile Phones
Rebuttal
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Cards vs. Mobile PhonesThe Case against Cards
• Trusted issuer?
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Cards vs. Mobile PhonesThe Case against Cards
• Business case for the issuer?
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Cards vs. Mobile PhonesThe Case against Cards
• Interoperability?Non-EMV cards for international travelers
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Cards vs. Mobile PhonesThe Case against Cards
• Efficient/Convenient for the Consumer?The “Costanza wallet”
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Cards vs. Mobile PhonesThe Case against Cards
• Dependable/Reliable?
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The Case Against Mobile PhonesMobile Phones as a payment form factor will not replace cards until:
a.Trusted Relationship – Who is the issuer? Who does the consumer call? Liability?
b.Business Case for the Issuer – Incremental investment has to be offset by increased revenues.
c. Interoperability – Mobile payments will have to operate seamlessly regardless of hardware, carrier, or location.
d.Efficient/Convenient for the Consumer – Total transaction time will have to be the same or less than cards.
e.Dependable/Reliable – Must be able to use for all transactions anytime anywhere. Regardless of…
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Cards vs. Mobile PhonesCoverage Map
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Can you pay me now???
Uh oh!
Cards vs. Mobile PhonesThe Case Against Mobile Phones
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Even at the gas pump
Cards vs. Mobile Phones
The Final Say
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Our Mobile Form Factor R&D ExperienceHandset Stickers
Microtags microSDEmbeddedNFCw/ OTA
MobileMarketing& Alerts
Mobile Apps
Payments Innovation Timeline
Nov:Visa Mobile Payments
App Launch
Nov:Visa Mobile Payments
App Launch
Sep: REI iPhone
Credit Card Application
Sep: REI iPhone
Credit Card Application
Aug: SMS Alerts
Aug: SMS Alerts
Dec:Visa
Targeted Acceptance
Dec:Visa
Targeted Acceptance
Dec:External OTA/NFC
Pilot
Dec:External OTA/NFC
Pilot
2007 2008 2009 2010 2011
July:Flexperks
Contactless & EMV Card
Reliacard Mobile App
July:Flexperks
Contactless & EMV Card
Reliacard Mobile App
August:ShopText
Pilot
August:ShopText
Pilot
Oct: Contactless Payment at
Vending Machines
Pilot
Oct: Contactless Payment at
Vending Machines
Pilot
May: Internal Mobile
Payment Sticker Pilot
May: Internal Mobile
Payment Sticker Pilot
April: Visa Money
Transfer Pilot
April: Visa Money
Transfer Pilot
May: Utah Instant IssueMay: Utah
Instant Issue
Oct:AccelaPay Mobile App
Oct:AccelaPay Mobile App
Nov: Visa Mobile Offers-
Android
Nov: Visa Mobile Offers-
Android
Bringing Mobile Banking to Prepaid
• 1st Bank in U.S. to offer mobile banking with mobile bill pay to the under-banked
• AccelaPay and ReliaCard supported
REI Visa Mobile Card Acquisition & Servicing App
Move card offer marketing from in lane to the front of the store
Allow for secure and simple application process
Instant issue and access upon approval
Mobile servicing app once activated
Launched Sept 2011 for iOS
Available in Android soon
EMV Dual Interface Chip Cards
First in the U.S. to issue dual interface EMV compliant cards for frequent international travelers
27U.S. Bank Payment Services Confidential
Pilot Initiative – microSD enabledmobile payments
• Piloted with employees in 20 states
• Prepaid account with contactless payments, mobile banking, and mobile bill pay.
• Pilot was very close to how we envision commercialized mobile payments
• In refinement phase and can not comment on plans
VitaBand Contactless Pilot
Contactless MasterCard PayPass installed in wristband, with online site that enables sharing info with first responders
– 2,000 U.S. Bank employees participating– Employees will pay $10 to participate in the pilot,
which will be donated to the Employee Assistance Fund.
– 9 – 12 month pilot with ongoing engagement activities and surveys to gather feedback.
Conclusion
• U.S. Bank believes the race is still to undefined to call at this point
• Testing numerous solutions in phone and card based options
• Infrastructure is key to determining short term winner and losers
Cards vs. Mobile Phones
Q&A
31
Thank You
